Media and agency finance transformation: How CFOs can architect change and growth

Media CFOs are taking a leading role in helping their organizations adapt to new business models. In this point of view, we'll look at:

• Key industry changes and how organizations are responding
• How finance functions are transforming to drive this change
• How (particularly federated) agencies are decentralizing change to accelerate and enhance benefits

The shift to online has been faster and more comprehensive in media than in any other sector. This is forcing a change in business models and refocusing of strategies, including:

• Rebalancing revenue streams away from the traditional fixed-fee contracts, retainers, and commission for media placements toward faster growth areas such as digital communications, retail media, and connected TV
• Building new capabilities. To stay competitive, agencies continue to build new capabilities in areas such as commerce, experience, and technology, often through acquisitions. Technology investments in machine learning and generative AI are enabling agencies to enhance the core delivery model (such as through autogenerated content or automated market segmentation), improve efficiency, and drive innovation. This frees employees to focus more on strategic thinking and ideation rather than repetitive execution of tasks
• Simplifying organization structures. Companies are consolidating their structures under key services and brands, concentrating the development of capabilities (and ensuring access to them across the organization) and making it easier for clients to understand their complex businesses
• Diversifying into growth geographies. Fast-growth markets like China, India, and Brazil are attractive playing fields. While they offer significant opportunities, agencies must consider the unique challenges and complexities they present and the investment required to integrate these geographies into their existing business

The common thread across these industry developments is the need for decision support. From strategic investment choices to tactical profitability decisions, finance is being asked to step up with new or renewed services to support decision-making with faster, more frequent insights incorporating new data sources, scenario models, and visualizations, all while reducing the cost of finance.

To meet this demand, CFOs are transforming the finance function across the entire operating model. This involves:

• Streamlining reporting and analytics. From standardizing KPIs and performance measures, rationalizing financial reports, and integrating nonfinancial information to automating and accelerating forecasts, finance functions are enhancing data, tools, and analytics capabilities to satisfy the demand for business intelligence and insight from across agencies
• Simplifying processes and rationalizing systems. To improve interoperability between agencies and individual markets and increase the ease of doing business for clients, agencies are pushing to standardize more finance processes – from opportunity identification all the way through billing and accounting processes. To enable this standardization and reduce costs, they are looking to rationalize finance systems, including implementing orchestration and automation tools. This often avoids the need for costly and time-consuming ERP replacements
• Delivering data and analytics to support faster, local decisions. Finance leaders are creating a consistent, integrated view across the organization (and across ERPs) by implementing a single data model to support reports, analytics, and visualizations that improve margins through pricing and profitability enhancements
• Implementing new capabilities and operating models. The breadth of capabilities now required to meet business needs requires finance to adopt new operating models, including centers of excellence in data, analytics, and technology. Global business services and business process outsourcing organizations have now moved well beyond transaction processing and are being used as capability, integration, and innovation centers to make these capabilities available across the business

Traditional finance transformation approaches have typically relied on a centrally driven ERP or shared services implementation as a vehicle for standardization and improvement. But these approaches are slow, expensive, and often fail to deliver benefits beyond transactional processing efficiency. To deliver the breadth, scale, and pace of change required across diverse enterprises, organizations are shifting from this top-down model of transformation to a more modular approach. This new approach better reflects business unit requirements and reduces the dependency on monolithic central programs to enable change. These are the key principles that successful organizations are adopting to deliver rapid change:

• Change the finance transformation narrative. Change the business case narrative – away from cost reduction and functional improvement toward business impact that is meaningful to the business, its clients, and people
• Go local. Use local knowledge and build internal capabilities, backfilling where necessary to supplement capacity (rather than driving change from a central, often external, team)
• Drive adoption with innovation. Use innovative, consumer-tested tools to embed adoption – for example, create report catalogs and use peer recommendations and reviews (or "likes") to direct users to the most effective sources of information
• Differentiate between requirements and resistance. Create multiple standards (of processes, policies, reports, and datasets) to reflect business archetypes in a modular fashion rather than trying to force-fit a global standard that doesn't work for any individual business unit
• Democratize transformation. By delivering platforms for reporting, analytics, and automation, organizations empower individuals to take ownership of continuous improvement, personal productivity, insight generation, and improved user experience

To understand, adapt to, and win in their new markets, media organizations need support and insights from their finance function. By creating data and analytics platforms and empowering local finance and business teams with integrated data and analytics tools, finance can help identify new opportunities and improve profitability and sustainable growth.